It is important for all companies to understand that mandatory reporting extends beyond mere compliance. It signifies a broader commitment to corporate governance and environmental stewardship, reaffirming that ESG is a top priority for your business. Companies now need to integrate sustainability into their business strategies and decision-making processes, ensuring they meet the expectations of regulators, investors and other stakeholders.

Sustainability reporting offers several benefits to companies, including enhanced transparency, improved investor trust and better risk management. By disclosing your environmental impact, your company can demonstrate your commitment to sustainability, improving your reputation and attracting socially conscious investors. “Younger generations make a lot of decisions based on how sustainable the business is and how they treat their employees,” Tina advises. “This transparency is just another reason why sustainability reporting is important.”

However, implementing sustainability reporting also presents challenges. Companies must invest in new systems and processes to collect and report data accurately. This process can be costly and resource-intensive, particularly for SMEs. Tina acknowledges these challenges but also offers the following advice. “Right now, it’s about understanding what your company needs to do, especially in relation to climate. There’s an expectation that you understand what your carbon footprint is, what your hotspots are, and how you can reduce carbon emissions. From there, what sort of initiatives can you take in terms of carbon offsets or decarbonisation strategy? I think the main challenges are understanding first, what sustainability reporting is and second, what needs to be done. Compliance requirements are still in the early stages, so getting a good understanding of what you need to do and communicating that with your staff is essential.”

To understand the advantages and disadvantages of sustainability reporting, as well as why sustainability reporting is important, you need to establish or outsource a dedicated ESG task force team. They’ll be able to oversee data collection, ensure compliance with regulatory requirements and communicate the company’s sustainability efforts to stakeholders. Additionally, investing in training and technology can help streamline the reporting process and reduce costs over time.

Sustainability reporting will also provide insights that can help you gain a competitive advantage and become an industry leader. “It is imperative to keep up to date with what is happening, especially regulatory changes, and be prepared to move quickly as compliance requirements evolve,” Tina says.

Complying with the new sustainability reporting regulations requires a systematic approach. The Task Force on Climate-related Financial Disclosures (TCFD) provides a framework that companies can use to enhance their climate-related reporting. This TCFD summary includes guidelines on governance, strategy, risk management, metrics and targets.

Tina recommends that companies start collecting data and use the right tools to do so. “The SGX has a minimum set of data that every business has to collect, which includes 27 core ESG metrics,” Tina explains. This data collection is crucial for understanding the company’s environmental impact and identifying areas for improvement.

The TCFD is an international organisation that aims to create a standardised set of climate-related financial risk disclosures. These disclosures are intended for companies and financial institutions to provide clearer information to their investors, stakeholders and the general public about the financial risks they face due to climate change.

While SGX requires listed companies to adopt the TCFD recommendations for climate-related reporting, it is also aligning with the International Sustainability Standards Board’s (ISSB) efforts to create a global baseline for sustainability disclosures. In March 2024, Singapore Exchange Regulation (SGX RegCo) launched a consultation on how the ISSB standards are to be incorporated into its sustainability reporting rules for climate-related disclosures.

In order for companies to comply with the reporting standards, they first have to understand their climate risks and opportunities. BoardRoom can help with conducting climate risk assessment workshops and drafting sustainability and climate reports according to TCFD and ISSB standards, including TCFD summary, TCFD disclosure examples and TCFD training. BoardRoom can also assist companies with funding applications from Enterprise Singapore.

Enterprise Singapore offers funding and grants to support companies in their ESG journey, such as the Enterprise Development Grant (EDG) which provides support for projects aimed at upgrading, innovating, growing, and transforming your business. There is a small window for companies to take advantage of this grant. From 1 April 2023 to 31 March 2026, under the EDG, small and medium-sized enterprises (SMEs) can receive up to 70% support for sustainability-related projects. EDG covers eligible project costs, including third-party consultancy fees, software and equipment expenses, and internal manpower costs.

As a Registered Management Consultant (RMC) with Enterprise Singapore, Tina emphasises, “Navigating climate-related challenges and opportunities requires not just compliance but strategic foresight. Our goal is not just to help companies meet the reporting standards, but also access funding to drive impactful climate initiatives.” This approach ensures that companies enhance their sustainability strategy while securing the financial support needed for their climate goals.

ESG reporting involves transparently sharing standardised details about a company’s sustainability initiatives, objectives, and advancements to underscore its dedication to ethical business conduct. This enables stakeholders to understand the extent of a company’s sustainability efforts.

Operating within the ESG framework, sustainability reporting enables companies to highlight their endeavours in tackling environmental issues, fostering social accountability, and instating effective governance measures. It serves as a channel for companies to communicate their sustainability strategies, objectives, and achievements to investors, clientele, workforce, and the broader community.

Although ESG and sustainability share overarching objectives, they diverge in their reporting approaches.

ESG reporting entails a set of criteria used by investors, stakeholders, and organisations to assess a company’s non-financial performance. It evaluates a company’s environmental, social, and governance practices and their implications for long-term sustainability and risk management. Factors such as climate change initiatives, employee relations, board composition, executive compensation, and risk mitigation strategies are examined.

On the other hand, sustainability reporting takes a comprehensive approach, considering the long-term sustainability of the planet, society, and economy. It aims to meet current needs while ensuring future generations can meet their own. This involves evaluating businesses’ impacts on the environment and implementing strategies to enhance resilience, resource efficiency, and social progress.

Prioritising ESG reporting holds significance for organisations in Singapore, as it can enhance corporate reputation and help mitigate potential risks. In 2016, the Singapore Exchange (SGX) introduced the Sustainability Reporting Guide, making it mandatory for all listed companies to disclose their sustainability practices on a ‘comply or explain’ basis.

In ESG reporting, it’s crucial to adhere to certain principles when sharing insights with stakeholders.

Navigating the complexities of ESG reporting demands precise data collection, reporting, and analysis. BoardRoom’s ESG Access offers a comprehensive software solution tailored to simplify sustainability reporting for companies in Singapore.

ESG Access presents an array of tools that streamline data requests, response collection, and evidence gathering, ensuring seamless access and collaboration to essential information. The software incorporates functionalities for reviewing, validating, and auditing, empowering stakeholders to contribute, review, and endorse reporting timelines, all within a unified platform. Entity reporting allows you to easily organise users into groups (entities) and control/assign ESG metrics specific to each group, so you can improve decision making, identify growth opportunities and manage group risks. Additionally, it allows you to craft and personalise your sustainability reporting to align with the specific requirements of your stakeholders.

SMEs in Singapore can leverage the Enterprise Development Grant (EDG)  to offset costs associated with ESG services provided by BoardRoom. This grant enhances accessibility and affordability for SMEs seeking to improve their sustainability practices while complying with ESG reporting standards. 

Get a free 7-day trial on our ESG Access reporting software now.

Due diligence in ESG entails a comprehensive investigation and assessment of a company’s strategies and policies in these domains. This includes scrutinising the company’s impact on the environment, society, and stakeholders, along with its governance and ethical framework.

In the process of ESG due diligence, investors and businesses in Singapore analyse various aspects, including the company’s environmental footprint, waste management strategies, treatment and diversity of employees, customer safety and satisfaction, community involvement, board composition, executive compensation structure, and adherence to ethical business norms. Through this thorough examination, stakeholders determine whether the company aligns with established ESG standards and principles.

Conducting due diligence for ESG purposes involves a structured process comprising five key steps:

While conducting due diligence for ESG is imperative for businesses, several challenges may arise during the process:

ESG is a response to a range of concerns, including climate change, rising social inequality and the changing nature of economies.

Investors and stakeholders are increasingly taking ESG into account in their decision-making. Society, customers and clients also expect the companies they interact with to be environmentally and socially responsible. Companies that have robust ESG strategies to manage risks can meet these expectations and compete successfully and strongly in the market.

In Singapore, implementing robust ESG practices offers SMEs the opportunity to differentiate themselves from their competition, attracting more investment, appealing to a larger customer base and ensuring long-term success.

For SMEs eyeing European markets, showcasing solid ESG practices is vital. Europe’s strict corporate social responsibility and sustainability regulations dictate that businesses adopt and visibly demonstrate their ESG commitment.

In compliance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, the Singapore Exchange (SGX) requires all issuers, including the many SMEs listed, to incorporate climate-related reporting in their sustainability reports. This requirement means companies will have to report on their social and environmental impacts and performance.

The date from which companies have to comply with this mandatory reporting depends on the relevant industry. For example, those in financial services, energy and agriculture are required to report under the TCFD framework from the financial year 2023. Building and transport industries will be required to report from 2024.

These challenges shouldn’t stop SMEs from exploring the benefits of ESG adoption for cost savings, improved efficiency and risk reduction.

• increased cost savings from ESG policies, such as a reduction in water and energy usage;
• ESG risks and opportunities can be easily identified if supply chain processes are streamlined;
• reduction in waste and the costs associated with waste management;
• reduction in the risk of regulatory fines due to non-compliance;
• an increase in shareholder value and attracting increased investment;
• appealing to a broader range of potential customers;
• an increase in employee morale, efficiency and health and safety outcomes as a result of prioritising employee wellbeing;
• an ability to attract and retain talent and build a stronger employee brand;
• access to new markets;
• access to tax incentives and government grants; and
• differentiation, which can offer many SMEs a competitive advantage.

Clients, customers, investors and regulators now expect businesses of all sizes to reduce their harmful impacts on the environment and people while increasing their resilience to the effects of climate change.

SMEs with ESG cost-saving and other strategies in place that align with their business purpose are much better placed to adapt and meet the challenges of the future while capitalising on opportunities today.